REG - Tullow Oil PLC - Heads of terms for sale of Kenyan assets for $120m

Tullow OilAnnouncement

15/04/2025 09:45

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RNS Number : 0870F  Tullow Oil PLC  15 April 2025

Tullow Oil plc

 

Tullow agrees heads of terms for sale of Kenyan assets for $120 million
$80 million near-term cash receipts
Option to back-in for 30% of potential future development phases at no cost

Transaction with Gulf Energy, a leading Kenyan energy and infrastructure group

15 April 2025 - Tullow Oil plc (Tullow) is pleased to announce that its
wholly-owned subsidiary, Tullow Overseas Holdings BV, has signed a heads of
terms agreement with Gulf Energy Ltd (the "Buyer") to sell Tullow Kenya BV,
which holds Tullow's entire working interests in Kenya, for a total
consideration of at least $120 million (the "Transaction").

The consideration will be split into a $40 million payment due on completion,
$40 million payable at the earlier of Field Development Plan (FDP) approval or
30 June 2026, and $40 million payable over five years from the third quarter
of 2028 onwards. In addition, Tullow will be entitled to royalty payments
subject to certain conditions. Tullow also retains a back-in right for a 30%
participation in potential future development phases at no cost.

The Transaction is accretive to both equity and leverage and further
accelerates Tullow's deleveraging process.

This Transaction will constitute a significant transaction for the purposes of
UKLR 7 of the UK Listing Rules (as came into effect on 29 July 2024). Further
announcements will be made in due course upon full form transaction
documentation being entered into by the parties.

Transaction highlights

·      Minimum cash consideration of $120 million, with additional
royalty payments subject to certain conditions.

·      Tullow retains a back-in right for a 30% participation (before
Government back-in) in potential future development phases at no cost.

·      Corporate sale of Tullow's entire Kenyan portfolio of assets.

·      All past and future liabilities will be transferred to the Buyer
as part of the Transaction.

·      Conditions precedent for completion of the Transaction include:

-  All necessary regulatory approvals.

-  Delivery of payment guarantees satisfactory to Tullow in relation to
Tranche B and C (see Consideration Structure).

·      Entering into the full sale and purchase agreement (SPA) is
targeted within the coming months with completion of the Transaction and
receipt of first payment during 2025.

Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow, commented:

"Today's announcement marks another step forward in Tullow's accelerated
deleveraging journey with near-term cash receipts of $80 million and
mitigating significant capital exposure, whilst retaining a material option on
the future development of the project. I am confident that the proceeds from
this transaction, coupled with the $300 million from the disposal of our
assets in Gabon, position the business strongly for a successful refinancing.

"We look forward to working with Gulf Energy, who have the requisite financing
to complete the transaction and are a strong and credible counterparty, and by
doing so, unlock material value for the people of Kenya."

Consideration structure

·      Total consideration of $120 million, consisting of:

-   Tranche A: $40 million payable on Transaction completion.

-   Tranche B: $40 million payable at the earlier of FDP approval or 30 June
2026.

-   Tranche C: $40 million payable no later than 30 June 2033, subject to
the following payment schedule:

§ Payments of $2 million per quarter starting in the third quarter of 2028,
provided Dated Brent oil price averaged at least $65/bbl during the preceding
quarter.

§ If $40 million in aggregate has not been paid by 30 June 2033, the
remainder will be due to Tullow as a bullet payment at that point irrespective
of the prevailing oil price.

-   Tranche D: Quarterly royalty payments of $0.5/bbl multiplied by 80% of
total production, subject to oil price, resource and production related
conditions.

 

 CONTACTS
 Tullow Investor Relations                    Camarco (Media)

                                            (+44 20 3757 4980)
 ir@tullowoil.com (mailto:ir@tullowoil.com)

                                            Billy Clegg
 Matthew Evans

                                            Georgia Edmonds
 Rob Hayward

                                              Rebecca Waterworth

 

This announcement contains inside information for the purposes of Article 7 of
Regulation 2014/596/EU which is part of domestic UK law pursuant to the Market
Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR"). Upon the
publication of this announcement, this inside information (as defined in UK
MAR) is now considered to be in the public domain. This announcement is being
made on behalf of Tullow by Adam Holland, Company Secretary.

Notes to editors

Tullow is an independent energy company that is building a better future
through responsible oil and gas development in Africa. The Company's
operations are focused on its West-African producing assets in Ghana, Gabon
and Côte d'Ivoire, alongside a material discovered resource base in Kenya.
Tullow is committed to becoming Net Zero on its Scope 1 and 2 emissions by
2030 and has a Shared Prosperity strategy that delivers lasting socio-economic
benefits for its host nations. The Group is quoted on the London and Ghanaian
stock exchanges (symbol: TLW). For further information, please refer to:
www.tullowoil.com (http://www.tullowoil.com/) .

 

Gulf Energy and its affiliated companies constitute a leading energy and
infrastructure-focused group, engaged in oil and gas trading, power
generation, and industrial construction. As the largest supplier of refined
petroleum products into Kenya and the inland East African markets, Gulf Energy
plays a critical role in the petroleum supply chain across East Africa and has
the requisite experience, skill and manpower to complete the transaction and
implement the project.  For further information, please refer to:
www.gulfenergy.co.ke (http://www.gulfenergy.co.ke) .

 

Follow Tullow on:

LinkedIn: www.linkedin.com/company/Tullow-Oil
(http://www.linkedin.com/company/Tullow-Oil)

X: www.X.com/TullowOilplc (http://www.X.com/TullowOilplc)

 

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